In a country like Mexico entrepreneurs encounter a “frictionfull” environment in addition to the high barriers to entry. These elements mean higher risks. Because of the higher risks, entrepreneurs demand higher margins. The results are that a) does that do make it are extremely profitable, b) further uncompetitiveness and c) few entrepreneurs list their companies in the stock exchange – the successful ones are SO profitable that they do not need to go to the public markets to raise capital. This further worsens the competitiveness because the democratization of access to capital enabled by developed capital markets does not take place.
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